Christopher Lehane as the Official Assignee in Bankruptcy in the Estate of Peter Clohessy (A Former Bankrupt) v Peter Clohessy (A Former Bankrupt) and Anna Gibson Steel

• Jurisdiction: Ireland
• Judge: Mr. Justice Richard Humphreys
• Judgment Date: 25 February 2021
• Neutral Citation: [2021] IEHC 91
• Docket Number: [Bankruptcy No. 3984]
• Court: High Court
• Date: 25 February 2021

In the Matter of the Bankruptcy Act 1988 (As Amended)

and

In the Matter of Peter Clohessy (A Former Bankrupt)

Between

Christopher Lehane as the Official Assignee in Bankruptcy in the Estate of Peter Clohessy (A Former Bankrupt)

Applicant

and

Peter Clohessy (A Former Bankrupt) and Anna Gibson Steel

Respondents

[2021] IEHC 91

[Bankruptcy No. 3984]

THE HIGH COURT

BANKRUPTCY

Bankruptcy – Sale of property – Vacant possession – Applicant seeking order sanctioning sale of property – Whether special circumstances warranted refusal of order

Facts: The applicant, Mr Lehane (the Official Assignee) filed a motion on 20th December, 2019 seeking an order under s. 61(4) of the Bankruptcy Act 1988 sanctioning the sale of the property the subject matter of the application and an order directing the respondents, Mr Clohessy (the former bankrupt) and Ms Steel, to yield up vacant possession. The Official Assignee valued the property at €500,000 to €550,000 whereas the respondents valued it at significantly less. The matter was heard and judgment reserved on 8th February, 2021. The respondents argued that the matter should be dismissed for various reasons primarily relating to access to the site, planning permission issues and the boundaries of the site. The property was land-locked, a holistic centre on the property was built partly outside the boundary and some services were also somewhat outside the boundary. It was also suggested by the respondents that if the property was sold it would be sold at an undervalue.

Held by Humphreys J that there was a presumption in favour of granting an order under s. 61 of the 1988 Act unless special circumstances were shown to the contrary having due regard to all matters, including prejudice to the creditors, the bankrupt and any dependants. Humphreys J noted that the Official Assignee said that he was in negotiations with the receiver of the farm with a view to agreeing questions of access and boundaries, and as regards the planning permission issues, he saw those as relating to the use of the property rather than the structures themselves, so they were not matters that needed to be dealt with before the sale. Consequently, Humphreys J held that those issues did not provide a reason not to make the order. As regards the prejudice to the former bankrupt’s spouse and three children who would lose that particular home, and the additional prejudice to the spouse who would also lose the ability to conduct her business on the premises, Humphreys J held that this was a consequence of the former bankrupt’s indebtedness and was not a compelling, special or exceptional matter warranting refusal of the order. Humphreys J held that the balance of justice favoured the making of the order sought, subject to a condition that the property be first offered for sale to the respondents at a reasonable price having regard to market value, following resolution of the boundary and access issues. Humphreys J held that the matters of the value of the property and also the value and possibly the source of mortgage contributions made by the second respondent did not arise; the principle on the motion was whether the sale should be allowed and the value of the property would be clearer once the title-related issues were resolved, if they were. Having noted that s. 61(5) of the 1988 Act allows the court to order postponement of the disposition of the family home having regard to the interests of the creditors, the spouse or civil partner and dependents and to all the circumstances of the case, Humphreys J considered that the period of six months offered by the Official Assignee was reasonable; the two years suggested by the respondents would impose an unwarranted delay on the creditors and six months provided a realistic opportunity for the title-related questions to be resolved.

Humphreys J held that the order would be as follows: (i) an order under s. 61(4) of the 1988 Act permitting the Official Assignee to sell the dwelling house the subject matter of the application in order to realise the interest of the first respondent, subject to a condition that he first offer it for sale to the respondents at a reasonable price having regard to market value once the boundary and access issues are resolved; (ii) an order directing the respondents to yield up vacant possession of the property; (iii) a stay on both orders for six months from the date of the order; and (iv) liberty to apply (including in the event of being unable to agree on a market price for the property following resolution of the boundary and access issues).

Application granted.

Judgment of Mr. Justice Richard Humphreys delivered on Thursday the 25th day of February, 2021

1 Planning permission for the family home of the respondents was applied for in July 2003 and granted on 27th November, 2003. At the time the house was constructed, the first respondent (the former bankrupt) owned the adjoining 48-acre farm. That farm has since been repossessed by AIB and has been sold to Link Assets who are seeking to put it on the market.

2 In 2004 a further planning permission was granted, and on 15th July, 2006 planning permission for a swimming pool was sought, but the application appears to have been incomplete.

3 The former bankrupt ran into financial difficulties and prepared a statement of affairs on 8th December, 2016 showing that he was indebted in the sum of €13,684,311.38. The family home would seem to be the only real asset. That is jointly held with the second respondent, his wife. He was adjudicated bankrupt on his own petition on 23rd January, 2017.

4 As of 11th June, 2019 the mortgage on the property due to AIB was €236,392.69. On 22nd November, 2019, the Official Assignee wrote to the respondents offering to sell them the interest in the half of the property that had been vested in him by virtue of the bankruptcy. Those letters were returned as “not called for”.

5 The Official Assignee then filed a motion on 20th December, 2019 seeking an order under s. 61(4) of the Bankruptcy Act 1988 sanctioning the sale of the property and an order directing the respondents to yield up vacant possession. The Official Assignee values the property at €500,000 to...